STATEMENT BY GOVERNOR FOR THE BRITISH OVERSEAS TERRITORIES THE HONOURABLE HUBERT HUGHES
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1 STATEMENT BY GOVERNOR FOR THE BRITISH OVERSEAS TERRITORIES THE HONOURABLE HUBERT HUGHES Mr. Chairman, Fellow Governors, Directors, Advisers and Officers of the Bank, Distinguished Ladies and Gentlemen, I bring you greetings from the five British Overseas Territories, Anguilla, The Cayman Islands, The British Virgin Islands, Montserrat and the Turks and Caicos Islands. However, Mr. President, in addition to greetings, I must on behalf of the territories congratulate you on your promotion to the presidency of the Caribbean Development Bank (CDB). You have always been a dedicated and competent servant for the people of your Region and we look forward to productive relationships as we confront the many challenges that we face. I must say a special thank you to the Government and people of the Republic of Trinidad and Tobago for their warm and gracious hospitality in this, the island of pan and calypso. This environment is fitting for us to deliberate the operations of the Bank and its place in the future development of the Region that it serves. Our delegation wants to take this opportunity to recognise this meeting as a special one, by having seen the passing of the baton from the past president Dr. Compton Bourne to Dr. Warren Smith. We want to acknowledge Dr. Bourne s stewardship and sterling contribution to regional development. Dr. Smith sir, you are taking over the leadership of the Bank at a critical period in the history of the Region. We are all no doubt aware that as we navigate through these perilous times, that the Bank s ability to meet the needs of the Borrowing Member Countries (BMCs) will depend very heavily on your leadership and vision. This has been forcefully and confidently articulated in your first statement as President of the Bank to the Board of Governors at this meeting yesterday. I know that as you embark on this challenging journey that you are supported by deeply committed and capable staff, and you are also assured of the support of the Governors of the Bank, who wish you much success in your new role. A number of speakers in their presentations, including the new President, have all discussed the environment and context in which the Bank will operate. In this current depressed economy, several countries will experience economic decline ranging from -3.9% to -8.5% over the next year. Notwithstanding however, there is hope, as there are some countries which are projected to experience positive growth. This mandates that the Bank works with the less fortunate BMCs in order to turn around their economies. When we look at the issues presented to the Board of Directors we get a flavour of the problems we face. These range from budget deficits to macroeconomic instability/corporate governance matters. We have every confidence that the Bank will assist the countries to overcome these challenges. This environment demands a relevant and appropriate response and the President has presented this in his vision for the future of the Bank.
2 - 2 - The British Overseas Territories (BOTs) are pleased to be a part of the initiatives of this Region and on behalf of the combined islands of the BOTs, I would like to thank CDB for the support given to us over the past year. Anguilla has benefitted from a policy-based loan that will significantly impact its ability to navigate its way out of its financial difficulties. Montserrat has had a power generation infrastructural project and technical assistance (TA) approved in the Education Sector, and the British Virgin Islands is about to benefit significantly from financing to repair and make design improvements to its road and drainage infrastructure. In addition, our other family members in the north, the Turks and Caicos Islands, continue to benefit from both the Basic Needs Trust Fund and the Special Development Fund (SDF), while the Cayman Islands in the west benefitted from various TA programmes. Mr. Chairman, on behalf of each of these territories, I would like to give a heartfelt thank you to the Bank and its Staff, for demonstrating the highest levels of professionalism and commitment in ensuring that the work needed to complete these projects was done. The citizens of our various territories may never realise the significant contributions that a small number of their Caribbean brothers and sisters will have on their lives. I would like to convey to the Bank, its Staff and BOD, my deepest gratitude on their behalf. Mr. Chairman, as I am sure my predecessors have said on numerous occasions, the group of overseas territories (OTs), though small in size and share constitutions that are similar, they experience circumstances that are unique to each one. Some of us have highly developed service industries in financial services, but our various niche markets, even in this industry, are pronounced. Still others in the grouping are facing significant challenges with particularly challenging natural disasters, such as is the case in the emerald isle Montserrat, or recovering from the devastating effect of hurricane, as in the case of the Turks and Caicos. Mr. Chairman, the global financial crisis has had far reaching impact on the lives of the people of our Region. In addition, the result that the recent demise of CL Financial, CLICO and the British American Insurance Company has had on the savings and pensions of many of our citizens cannot be ignored. We must be committed to ensuring that our people in this Region will not have to experience such a failing in their regulatory systems again and that our approach to risk management treats with the extraneous risks the Region faces. The collapse in the global financial centres of the world were in part, as a result of inadequate due diligence, the lack of focus on fundamental financial principles and ignorance of the realisation of the interdependencies of the major financial centres of the world. Currently these major centres are attempting to correct this, by introducing systems that should, in the future, help to alleviate a repeat of such a devastating chain of events. In the Caribbean we must ensure that we, at the very least, replicate these efforts. There is no doubt that our small size is a major shortcoming. This is amplified by the fact that we are for the most part individual nation states. As a result we cannot, due to reasons such as economies of scale, compete with the major players of the outside world. We must then, in order to have a decent chance of improving the standard of living of our people, utilise the competitive advantages that may be inherent in our location and history. Dr. Ngozi Okonojo-Iweala, in her address at the William Demas Memorial Lecture, mentioned the point of the Caribbean brand. This tugs at the continually nagging point, that even though we may have varying views on the matter of integration in the Region, we must all agree that it is to our individual and regional benefit that we band together in a cohesive, economic unit. Small size can be an advantage as well, as we all know that small size is often directly related to the speed at which we can adapt to changes around us. Mr. Chairman, let us be honest with each other. As a people, we are amongst the best orators in the world, but we have always had a significant challenge in implementing policies and initiatives that
3 - 3 - would significantly impact the economic status of the Region in a timely manner. We must at some point, and I suggest very soon, make very difficult decisions that though painful in the beginning and which may take us out of our comfort zone for a while, will result in a paradigm shift in the Region. Innovation to my mind therefore, is not merely new inventions, but indeed means a new mindset among those who make decisions, and the people who they lead. Our relatively small size mandates that we must use information technology (IT) as our conduit into the international markets, and the means by which we keep informed on international standards and make the requisite changes in our Region to suit. Indeed IT must be at the forefront of all our endeavours going forward. The alleviation of poverty in the Region is the major driving force behind SDF, and I am pleased to note that CDB has been feverishly developing its Results Monitoring Framework as a way of monitoring the progress of the Bank in addressing the unpleasant social realities in the Region. Increased law enforcement cannot be the panacea for curtailing gang violence and other types of blue collar crime in the Region. In addition we must vigorously implement policies that minimise the incidence of social inequality and poverty alleviation. The Bank therefore has a vital role to play in this struggle to maintain the Caribbean region as a safe place to live for its citizens, as a pleasant place to play for our visitors, and a highly productive economic Region for ourselves and those that seek to do business with us, including our own brothers and sisters. We are happy that President Smith in his inaugural address has adequately treated this as part of his new vision for the Bank. Mr. Chairman, though we are somewhat hesitant to promote tariffs on imports to the Region we do realise that in order to reduce our vulnerability to extraneous shocks, the Region must be more self reliant, providing our own food supply and servicing our own professional and social needs. In order to do this, it is vital that we utilise innovative methods to reduce the cost of production of our commodities, so that it would be feasible and economical for our people to supply their own needs, while still remaining at the very least, marginally competitive with the major production centres of the world. Mr. Chairman, I mention all these things, with a basic understanding that the future of economic success in the Caribbean depends on the vibrancy of it private sector. It is this sector that will introduce the innovation and production efficiency that will be necessary for the Caribbean region to roar and bite on the global landscape. It is the private sectors that will recognise and service the needs of the markets within the Region and in some cases develop new ones. The role of the Bank therefore, and more specifically the Governors, is to promote transparent policies that minimise the dependency of our citizens on the public sector and usher in a new era of entrepreneurship in the Region. Our educated youth must be the vanguard of this thrust. Mr. Chairman, this is a formidable agenda which will require a participative approach involving the private sector, Non-Governmental Organisations and the like. I remain confident that the Bank in its efforts to remain relevant to the developmental needs of the Region, will benefit significantly from the leadership of BOD and the vision of the President, Dr. Warren Smith. Mr. Chairman, as I proceed please bear with me as I ventilate some issues regarding the Government of Anguilla in respect to our relationship with the British Government and the important implications it has today for our future. I must point out that these statements are strictly my views as Chief Minister of Anguilla. Our Anguillan voices need to be heard and if CDB is about development, then hindrances to development must be aired in a forum such as this. The British Government plays many important roles in the administration of Anguilla. It has total responsibility for good governance, the Public Service, the Police, Internal Security, the Prison, and the regulation of the important Financial Services Sector. Notwithstanding, I strongly suggest that the Foreign and Commonwealth Office (FCO) is not the appropriate Ministry under which the OTs should be administered. As OTs we would be better placed under the Home Office. Alternatively, a question
4 - 4 - continues to burn in my mind as to why Britain does not accord Crown Dependency Status to her OTs as she does for Jersey and Guernsey? I am not sure what is FCO s role when it comes to the OTs. For example, my Government has had the experience of having to produce three budgets within the first ten months of being elected. This was due to the refusal of FCO to sign-off on a well planned fiscal package formulated under the circumstances of a depressed economy and an adverse fiscal situation. This situation highlights the dilemma of Anguilla. This is a direct result of what Anguilla sees as irrelevant policies being applied to OTs by FCO. When FCO, together with the Governor, refused to sign our December 2010 budget, they had hoped to justify their refusal by sending in independent financial and economic consultants to write a new budget. In order to preempt this, I appealed to CDB, the Eastern Caribbean Central Bank and the European Union (EU) to be in Anguilla for the arrival of the consultants. Although the consultants approved the December 2010 budget, including the new revenue generating measures which my financial and economic technical staff had produced, the Governor delayed his signature for another month after he heard from the consultants that there was nothing wrong with the budget. On coming to office, I wanted the British to help in dealing with the signing of Memoranda of Agreements (MOA) in relation to the Flags, Viceroy, Cap Juluca and other hotel development projects in Anguilla. The rationale was to see if my government could claw back some of the lavish forgone revenue in the form of concessions given within these MOAs. I requested forensic audits from the United Kingdom Government. I told Her Majesty s Government (HMG) that because of its responsibility for good governance, it now appeared to be responsible for overseeing the demise of Anguilla s revenue base. I therefore sought reparation for the damage overseen by HMG, FCO and the Governors. Britain has responded with the Governor constantly engaging in activities that by all appearances seem aimed at destabilising my Government, by imposing new unsustainable taxes and by using the defeated opposition politicians as his allies. Anguilla s national debt increases almost on a monthly basis. Expenditure has been cut to the bone. The revenue base has been seriously undermined. Unemployment in the important construction sector is dangerously high. As OTs, the question arises as to the level at which we are permitted to conduct bilateral dealings with countries other than Britain. Currently it appears from Anguilla s point of view that help to Anguilla is limited to CDB and the EU for the most part. However, when Britain refuses to approve our properly formulated budgets all negotiations with these institutions cease. In the past, Britain claimed that the OTs had the first charge on British aid. They claimed that the UK would supply good government funds. The UK assumed responsibility for prisons. Anguilla had a prison built to house 38 inmates but it now houses nearly 80 inmates. The Governor s only solution is to lessen the number of law breakers being jailed or passing legislation to free prisoners who may not be considered high risk. The link with the UK as far as moving towards a new relationship with OTs serves as part of our problem and from all indications appears not to be part of our solution. It certainly does not seem to play a positive role in our economic and social development. Mr. Chairman, the OT s may be considered at a cross roads both politically and economically. Our future therefore should depend on negotiation and mutual respect.
5 - 5 - I thank you for listening and hope that as a people we continue to move forward as we stand on the shoulders of the giants that traversed this road before us. Thank you, Mr. Chairman.
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